Most of the time, most stocks mostly reflect their underlying company's value. Glu Mobile Inc. (NASDAQ:GLUU) isn't one of those stocks. This online video game designing name has been something of an enigma, whether you're talking about shares, or the company itself. Investors have known for some time that the organization is more than a minor player within the internet-gaming world, yet those same investors have been frustrated by a lack of certainty that Glu Mobile would ever actually turn a profit. Meanwhile, GLUU has been bullied higher from time to time by speculators hoping the hype would drive shares upward - even if only temporarily - in the foreseeable future. Yet, the stock has also encountered plenty of doubters and short sellers at various points during its history, as is frequently the case with new small cap stocks.
So what? The "so what" is the fact that Glu Mobile may finally be out of its pure guessing-game phase and has entered a valuation-oriented phase... at least partially. But, it's now deep enough into this rational-driven era that we can actually start to, you know, treat GLUU likes a real stock. And, that's something that should please the bulls.
Yes, Glu Mobile tried to stage a breakout in early March, and failed to follow-through on the effort. All it took was a brush of the 200-day moving average line (green) to start a major pullback from GLUU.
So what makes this time different? For starters, GLUU isn't contending with a major bullish gap that's been reeling the stock in from the beginning of the effort. And, this time it's had the benefit of getting the ball rolling again with a pushoff of the 50-day moving average line (purple). Indeed, it's the fact that Glu Mobile fans were willing to make a second go of things that speaks so loudly now.
Still, it would be much easier to get bullish on the stock if it could actually get - and stay - above that critical 200-day moving average line.
The good news is, Glu Mobile Inc. is actually making measurable progress that supports this new strength from the stock.
For starters, the company has a legitimate shot at turning a profit for the year. The pros even see it happening. The forward-looking P/E (2014) of 34.56 based on an earnings per-share estimate of $0.09 for next year. Don 't dismiss the idea either. The top line finally started to grow again in 2012, and the loss started to shrink again. Some traders are even talking about profitability for the first quarter of this year, on the heels of seven new games launched last quarter. It also unveiled real-money gambling games in the United Kingdom last quarter... a platform that should be easily opened up in the United States once New Jersey's allowance of online gambling starts to spread. That bodes well for 2014's potential swing to a full-year profit.
Bottom line? GLUU and its investors finally see a light at the end of the tunnel. Time to go shopping.
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